Press Information

MHI to Establish Subsidiary in Vietnam
For Commercial Aircraft Component Production
-- Domestic Facilities to Focus on High-value-added Operations --

No.1208
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Tokyo, November 27, 2007 - Mitsubishi Heavy Industries, Ltd. (MHI) will establish MHI Aerospace Vietnam Co., Ltd. (MHIVA), a wholly-owned subsidiary to produce commercial aircraft components, in Hanoi, Vietnam, in January 2008. MHIVA is scheduled to commence assembly of metal component structures in the spring of 2009. Through establishment of MHIVA, MHI aims to shift part of its metal component assembly work overseas, where abundant human resources are available, and to focus its domestic facilities on high-value- added operations. MHI is the first manufacturer in the world to locate its aircraft-related production facility in Vietnam. With the support from Boeing Commercial Airplanes, plans call for MHIVA to commence with assembly of flaps for the Boeing 737, with the scope of operations to ratchet up thereafter. This is one of the initiatives MHI has been developing together with Boeing, aiming to establish an efficient supply chain to enhance its competitiveness in the global market place.

MHIVA will be located at the Thang Long Industrial Park (TLIP), an industrial park jointly built by a Japanese and a Vietnamese company, situated approximately 16 kilometers northwest of central Hanoi. MHIVA will build a production plant with 4,000 square meters (m2) in floor area within the 19,000 m2 plant premises. In 2009 and 2010, MHIVA will assemble flaps for 2-8 airplanes every month, and for 10 airplanes starting in 2011. While parts for the flaps will be either supplied from Japan or procured from neighboring countries, including Malaysia and China, for some time to come, MHIVA will gradually expand local procurement in Vietnam in tandem with that country's industrial base development.

MHIVA, capitalized at US$7 million, will start with 50 employees, to be expanded to about 200 once production achieves momentum.

As price competition surrounding commercial aircraft becomes fierce, the world's aircraft manufacturers continue to shift part of their production bases to countries such as China, East Europe and Mexico. MHI's decision to establish MHIVA is in line with this move. The company decided to locate MHIVA in Hanoi, Vietnam, not only because it was able to secure a production site within a Japanese-affiliated industrial park with a good industrial infrastructure, but also in view of such factors as Vietnam's diligent labor force, robust economy, stable public security and the presence of overseas transport routes.

MHI presently has multiple large-scale new projects under way in the aerospace business, including full-scale production of composite material wing boxes for the next-generation super-efficient Boeing 787 Dreamliner and the MRJ (Mitsubishi Regional Jet) development program, the official launch of which is scheduled to be decided next spring. Going forward, the company will continue to work on expansion of its commercial aircraft business through dynamic combination of overseas bases that will deal mainly with assembly of currently existing components such as metal parts and domestic production bases focused on high-value-added operations that require sophisticated technologies, such as composite materials.